A Wedding, a wife, a house oh my!!!
 

So im quickly approaching my wedding date in May and have been looking into buying a house. With the amount of money that we have been putting into the wedding it has pretty much drained most of our savings accounts. I was just wondering if it was better to pay off my fiancees debt or save the money for the house. What looks better to a bank/lender, having no debt or having no savings?

Re: A Wedding, a wife, a house oh my!!!
 

Maybe it's just me, but debt is my first priority. Basically you think about the interest rate you are getting charged versus the money you're making in savings. I bet you it's way higher interest for your debt.

Congratulations by the way. :)

Re: A Wedding, a wife, a house oh my!!!
 

Just what TMC said. Chances are your debt is costing you more in interest payments than your savings is accruing, so I'd say get that debt paid down first.

What kind of debt does she have? If we're talking past due credit cards/collections accounts, you absolutely want to wipe those out immediately to minimize the impact on your credit score. If you're just talking student loans, a car payment, or credit cards that aren't past due, just keep paying it down on time (pay more than the monthly minimum whenever possible) and hang on to your savings in case of emergencies.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=GMScud;885061]Just what TMC said. Chances are your debt is costing you more in interest payments than your savings is accruing, so I'd say get that debt paid down first.

What kind of debt does she have? If we're talking past due credit cards/collections accounts, you absolutely want to wipe those out immediately to minimize the impact on your credit score. If you're just talking student loans, a car payment, or credit cards that aren't past due, just keep paying it down on time (pay more than the monthly minimum whenever possible) and hang on to your savings in case of emergencies.[/quote]

Nothing past due. Just credit card debt. Someone told me it was better to have no debt then no savings. I was just checking to see if it was the correct advice

Re: A Wedding, a wife, a house oh my!!!
 

They are 100% right. My wife had a state retirement plan for one year from working at VT right after college. We ended up cashing that out to pay down some debt.

Now, I wouldn't recommend cashing out years of 401k to do that, but in this instance it just made more sense to make sure you have no debt.

Re: A Wedding, a wife, a house oh my!!!
 

Eliminating debt is always the top priority. Always.

Re: A Wedding, a wife, a house oh my!!!
 

Balance debt payment and savings. Its amazing how much 1000 dollars today where you reinvest all the dividends can be worth in 30 years. They say always to pay yourself first. Take a small amount of money off the top -- and put it into an IRA or into the stock market. My boss is great at giving me stocks that have a very consistent performance.

That said, it depends on the debt. Student Loans? Low interest car payment? Mortgage? -- do some saving. Credit cards? PAY PAY PAY!

Re: A Wedding, a wife, a house oh my!!!
 

Well paying of dept is fine but if its not out of line it should not hurt you too much. You cannot buy a home without a down payment so I would think saving for the down payment is also an issue. You may want to rent for the first year or so your married and get all your financies in line then think about buying a home. With that said I would also keep an eye on the market and if you see home values going back up buy before they go up too much.

Another good idea is to go to your banker and have them pull your credit and qualify you fo a loan. They then can make recommendations to help you when your ready to buy.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;885621]Well paying of dept is fine but if its not out of line it should not hurt you too much. You cannot buy a home without a down payment so I would think saving for the down payment is also an issue. You may want to rent for the first year or so your married and get all your financies in line then think about buying a home. With that said I would also keep an eye on the market and if you see home values going back up buy before they go up too much.

Another good idea is to go to your banker and have them pull your credit and qualify you fo a loan. They then can make recommendations to help you when your ready to buy.[/quote]


You can get no down payment mortgages.

Your rate will be higher but you can do it.

[url]https://www.navyfederal.org/products-services/loans/mortgage/mortgage-rates.php[/url]

Re: A Wedding, a wife, a house oh my!!!
 

If you have no debit and or never paid down any debit that is going to hurt you as well in getting a mortgage. You need to build a credit history.

Re: A Wedding, a wife, a house oh my!!!
 

[QUOTE=mredskins;885624]You can get no down payment mortgages.

Your rate will be higher but you can do it.

[URL]https://www.navyfederal.org/products-services/loans/mortgage/mortgage-rates.php[/URL][/QUOTE

They are out there but good luck getting that loan.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;885621]Well paying of dept is fine but if its not out of line it should not hurt you too much.[B] You cannot buy a home without a down payment so[/B] I would think saving for the down payment is also an issue. You may want to rent for the first year or so your married and get all your financies in line then think about buying a home. With that said I would also keep an eye on the market and if you see home values going back up buy before they go up too much.

Another good idea is to go to your banker and have them pull your credit and qualify you fo a loan. They then can make recommendations to help you when your ready to buy.[/quote]

Not really true...you can buy a home without a down payment, albeit maybe not a $300,000 home, but it's possible as long as you're willing to pay PMI.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=NC_Skins;885070]Eliminating debt is always the top priority. Always.[/quote]


Really the best answer and advice that Dave Ramsey would give to everyone looking to purchase a home. I'm in the same boat right now. I have debt (a bit of credit card debit, student loans, car payment, house payment even though I have found a possible buyer for it,) and have not been able to save for a down payment for trying to pay for a honeymoon and all the trimmings.

We both don't like the idea of renting, especially when renting means spending $800 - $1200 a month. However, we both think it's important to pay off as much debt prior to the purchase of a house as possible. My goal is to at least have the credit card bill and the student loan paid off. I've just purchased my car, so it's going to be awhile before that gets paid off.

We're getting married in October, and I fear I'm going to be completely broke by then...lol!

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;885642][QUOTE=mredskins;885624]You can get no down payment mortgages.

Your rate will be higher but you can do it.

[URL]https://www.navyfederal.org/products-services/loans/mortgage/mortgage-rates.php[/URL][/QUOTE

They are out there but good luck getting that loan.[/quote]


Really I have been looking for a new home and they cleared me for that and other types of mortgage, no big deal.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;885798]Really the best answer and advice that Dave Ramsey would give to everyone looking to purchase a home. I'm in the same boat right now. I have debt (a bit of credit card debit, student loans, car payment, house payment even though I have found a possible buyer for it,) and have not been able to save for a down payment for trying to pay for a honeymoon and all the trimmings.

We both don't like the idea of renting, especially when renting means spending $800 - $1200 a month. However, we both think it's important to pay off as much debt prior to the purchase of a house as possible. My goal is to at least have the credit card bill and the student loan paid off. I've just purchased my car, so it's going to be awhile before that gets paid off.

We're getting married in October, and I fear I'm going to be completely broke by then...lol![/quote]

Honestly renting in this market is not such a bad thing. Especially and I am assuming you are fairly young and don't have kids yet. I am five years into my marriage now and have two kids. We have money saved we know where we want to live and we know what we need size wise. My next house most likely will be my house for the next 20 years. With that said I wish we would have rented the house (we bought when we first married) I own now because it doesn't fit my needs anymore and it has not appreciated one red cent. I will probably keep it and make it a rental property.

Yes back in the day you and your new bride would have bought a "starter" home then after several years of living there you sell and with the appreciation you use that to buy your next house, well that ain't happen now a days. You be better to rent and invest your extra $$$ elsewhere out of the real estate market. Then when you know exactly what you need in a home go buy that house.

Re: A Wedding, a wife, a house oh my!!!
 

Mredskins thinking is totally different then mine. With all the people loosing homes and loosing jobs the demand for rentals is way up and also increasing the cost to rent. Housing prices are at a low and will probably not dip much if any lower so buying now is a great time. I wish I was not getting ready to build or I would go out and buy several homes as investments.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;885824]Mredskins thinking is totally different then mine. With all the people loosing homes and loosing jobs the demand for rentals is way up and also increasing the cost to rent. Housing prices are at a low and will probably not dip much if any lower so buying now is a great time. I wish I was not getting ready to build or I would go out and buy several homes as investments.[/quote]


But you are assuming that the housing market will ever get back to what it used to be. Very few homes are appreciating these days. If you are buying the homes as rental income, yes that makes sense but it sounds like this guy is looking for a place to live and most likely be looking at a starter home. He may find several years down the road when he may need a bigger home that house maybe very well be worth less then he paid for it.

Buying homes today is almost like buying a car, it is no longer a investment.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;885827]But you are assuming that the housing market will ever get back to what it used to be. Very few homes are appreciating these days. If you are buying the homes as rental income, yes that makes sense but it sounds like this guy is looking for a place to live and most likely be looking at a starter home. He may find several years down the road when he may need a bigger home that house maybe very well be worth less then he paid for it.

Buying homes today is almost like buying a car, it is no longer a investment.[/quote]

We both have seperate apartments that cost over $2000 combined. I have been renting for about 6 years and see no point to renting anymore. At this point I have excellent credit as does she so that wouldnt be an issue.

I know that the housing market is not the greatest right now but i figure if im gonna put 2000 towards housing fee's i'd like to see something for my money

[QUOTE=WaldSkins;885871]We both have seperate apartments that cost over $2000 combined. I have been renting for about 6 years and see no point to renting anymore. At this point I have excellent credit as does she so that wouldnt be an issue.

I know that the housing market is not the greatest right now but i figure if im gonna put 2000 towards housing fee's i'd like to see something for my money[/QUOTE]

That is the point; you won't see anything. Unless you are think of staying in that house for 30 years it will not appreciate fast enough to be worth your wild if you just stay say five years in it.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=WaldSkins;885048]So im quickly approaching my wedding date in May and have been looking into buying a house. With the amount of money that we have been putting into the wedding it has pretty much drained most of our savings accounts. I was just wondering if it was better to pay off my fiancees debt or save the money for the house. What looks better to a bank/lender, having no debt or having no savings?[/quote]


WaldSkins: Let me address your original question first with some sound advice:

1. PAY OFF THE DEBT FIRST! No questions asked. PAY THE DEBT OFF FIRST! As attractive as it might sound to fall into a no down payment situation with a house, and again, I'm in the same boat as you, don't put buying a home in front of paying off the debt.

2. Before you even think of saving for the house, you need to SAVE UP AN EMERGENCY FUND FIRST! Your goal on that is at least 3 to 6 months worth of living expenses. What if you buy a house and both of you lose your jobs? You gotta have an emergency fund. DON'T RELY ON CREDIT CARDS AS AN EMERGENCY FUND!

3. Once #1 and #2 have been satisfied, decide what your intentions are on a house purchase. Do you plan to live there for at least 10 to 15 years? You need to know this before you buy a house. Whatever the answer is, you definitely want to be saving back money to either purchase the house straight out (yes I know that's probably not realistic for most people) or for a down payment NO LOWER THAN 20%. Don't go into a house purchase without knowing what is you're wanting to do or what it is you're actually purchasing.

4. Once you have found the house you want to purchase, it doesn't matter if it's a starter home or if it's one you plan on being in for the rest of your life, you need to budget out your mortgage payments for a 15 YEAR LOAN! Trust me, you'll be paying nearly double for that house if you get sucked up into a 30 year loan. And also, don't budget it on both salaries, budget it for one salary. Most people go out and grab the 30 year loan thinking they can always double up on the payments, but almost nobody ever pays double on their mortgage.

Now, don't listen to people who say investing in real estate is not worth it. It IS worth it, but you HAVE to be smart about it. You can't go in over your head on a purchase. And for the love of everything that is burgundy and gold, don't purchase property in hopes of turning it into rental property UNLESS IT'S PAID IN FULL! That's a bad, bad move that can seriously get you into a bad financial situation.

Now, are there any decent apartments in a decent area to rent that are cheaper than $1000 a month? If so, move there! Even if the apartments are smaller, maybe not as nice, this is just a way for you to free up some money to get you started. If not, then one or both of ya'll might need to think about a second job - at least until the debt has been satisfied. There's nothing wrong in both contributing to the savings for a house, but like I said earlier, the payment for the house should be based on one salary.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;886137]WaldSkins: Let me address your original question first with some sound advice:

1. PAY OFF THE DEBT FIRST! No questions asked. PAY THE DEBT OFF FIRST! As attractive as it might sound to fall into a no down payment situation with a house, and again, I'm in the same boat as you, don't put buying a home in front of paying off the debt.

2. Before you even think of saving for the house, you need to SAVE UP AN EMERGENCY FUND FIRST! Your goal on that is at least 3 to 6 months worth of living expenses. What if you buy a house and both of you lose your jobs? You gotta have an emergency fund. DON'T RELY ON CREDIT CARDS AS AN EMERGENCY FUND!

3. Once #1 and #2 have been satisfied, decide what your intentions are on a house purchase. Do you plan to live there for at least 10 to 15 years? You need to know this before you buy a house. Whatever the answer is, you definitely want to be saving back money to either purchase the house straight out (yes I know that's probably not realistic for most people) or for a down payment NO LOWER THAN 20%. Don't go into a house purchase without knowing what is you're wanting to do or what it is you're actually purchasing.

4. Once you have found the house you want to purchase, it doesn't matter if it's a starter home or if it's one you plan on being in for the rest of your life, you need to budget out your mortgage payments for a 15 YEAR LOAN! Trust me, you'll be paying nearly double for that house if you get sucked up into a 30 year loan. And also, don't budget it on both salaries, budget it for one salary. Most people go out and grab the 30 year loan thinking they can always double up on the payments, but almost nobody ever pays double on their mortgage.

[B]Now, don't listen to people who say investing in real estate is not worth it. It IS worth it, but you HAVE to be smart about it. You can't go in over your head on a purchase. And for the love of everything that is burgundy and gold, don't purchase property in hopes of turning it into rental property UNLESS IT'S PAID IN FULL! That's a bad, bad move that can seriously get you into a bad financial situation.
[/B]
Now, are there any decent apartments in a decent area to rent that are cheaper than $1000 a month? If so, move there! Even if the apartments are smaller, maybe not as nice, this is just a way for you to free up some money to get you started. If not, then one or both of ya'll might need to think about a second job - at least until the debt has been satisfied. There's nothing wrong in both contributing to the savings for a house, but like I said earlier, the payment for the house should be based on one salary.[/quote]

Not necessarily true all depends on your cash flow. As long as you can float the mortgage when no one is there you can pull it off.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;885970]That is the point; you won't see anything. Unless you are think of staying in that house for 30 years it will not appreciate fast enough to be worth your wild if you just stay say five years in it.[/quote]

I purchased a home in the peak of the market in 2006 and we will still make money on our home. Buying now in a down market is the best time to buy because thing can only go up.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;886148]I purchased a home in the peak of the market in 2006 and we will still make money on our home. Buying now in a down market is the best time to [B]buy because thing can only go up[/B].[/quote]


You hope but nothing in the last 5 years has made me to believe that.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;886152]You hope but nothing in the last 5 years has made me to believe that.[/quote]

Even if they stayed level for 5 years your better off buying.

Re: A Wedding, a wife, a house oh my!!!
 

Really it all boils down to risk and how much of it you are comfortable with.

Money, religion and politics are all things folks have huge varying opinions on so what you need to do is ask yourself how much are you willing to risk to in order to fill your needs.

I know folks that live in a two bedroom rancher but have the money to upgrade to something larger but are afraid of the risk involved, to me that is not living.

Then I know plenty more folks that live in houses they can't afford and they can't do anything because they are house poor, to me that is not living also.

So you just basically need to find your comfort level in the risk you are willing to take. No one here can make that decision for you.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;886143]Not necessarily true all depends on your cash flow. As long as you can float the mortgage when no one is there you can pull it off.[/quote]

Repeat, it is a BAD, BAD move.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;886170]Repeat, it is a BAD, BAD move.[/quote]


In your mind I have done it now counting the condo I bought in college for over 15 years, made great money on that place, over the entire time. I have two other small investment like that. I have had years where I have lost some money on them due to repairs or low occupancy but in the whole scope of the investment I have made positive dollars.

It is just a risk you personally are not willing to take that doesn't make it a bad idea or bad investment. There are many variables that come into play.

I much rather have those dollars wrapped in them then the current stock market.

I would not recommend it to everyone but I have the cash flow right now to make it a low risk investment.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;886177]In your mind I have done it now counting the condo I bought in college for over 15 years, made great money on that place, over the entire time. I have two other small investment like that. I have had years where I have lost some money on them due to repairs or low occupancy but in the whole scope of the investment I have made positive dollars.

It is just a risk you personally are not willing to take that doesn't make it a bad idea or bad investment. There are many variables that come into play.

I much rather have those dollars wrapped in them then the current stock market.

I would not recommend it to everyone but I have the cash flow right now to make it a low risk investment.[/quote]

So now its a good idea?LOL

Re: A Wedding, a wife, a house oh my!!!
 

[quote=firstdown;886201]So now its a good idea?LOL[/quote]
I know my advice original was for someone just starting out. If I had no investments and was just getting married I would not take that risk of buying a home and/or getting rental properties.

I think we are not seeing eye to eye where money can be made in the real estate market. you seem to beleive you can buy something then have it appreciate and make money. I don't see that as a good risk since the housing market is frozen or worst melting. My investments were ones I made because I moved kept the property and rented them out, all before purchased before 2005.

In hindsight there was a good amount of risk and most likely still is but I am willing to take it has panned out well so far for me.

To be clear I would not add anymore properties right now that would be too risk in my opinion for me. someone else may have a better cash flow and it be lower risk for them.

Re: A Wedding, a wife, a house oh my!!!
 

Pay off debt first. If the interest is not tax deductible, then you want it gone before you buy a house. So unless it's a student loan, pay off the debt.

Then save up an emergency fund. Sock away enough to cover 6 months of your basic expenses: rent, food, utilities.

Then save up to buy a house, never dipping into the emergency fund. I don't think you need 20% down, that's impractical for a lot of people. The long term appreciation on the price of the home will outpace the cost of personal mortgage insurance.

Just keep your monthly mortgage payment (including taxes & insurance) less than 33% of your net monthly income. Any more than 33% and you'll start to feel the pinch.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=Schneed10;886225]Pay off debt first. If the interest is not tax deductible, then you want it gone before you buy a house. So unless it's a student loan, pay off the debt.

Then save up an emergency fund. Sock away enough to cover 6 months of your basic expenses: rent, food, utilities.

Then save up to buy a house, never dipping into the emergency fund. I don't think you need 20% down, that's impractical for a lot of people. The long term appreciation on the price of the home will outpace the cost of personal mortgage insurance.

Just keep your monthly mortgage payment (including taxes & insurance) less than 33% of your net monthly income. Any more than 33% and you'll start to feel the pinch.[/quote]

To add to that, make sure that you still have room to save some money after you make your mortgage payments. With having a house, you never know when something is going to happen that will require you to put up some money to fix it.

Re: A Wedding, a wife, a house oh my!!!
 

All this talk about renting out a house or not seems overlook whether WaldSkins and his wife wants to be a landlord and/or landlady and deal with tenants, and there are plenty of tenants who are "pesky". Well, there are property management companies, but there are potential principal/agent issues with them too.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=SirClintonPortis;886357]All this talk about renting out a house or not seems overlook whether WaldSkins and his wife wants to be a landlord and/or landlady and deal with tenants, and there are plenty of tenants who are "pesky". Well, there are property management companies, but there are potential principal/agent issues with them too.[/quote]

Dingus. The choice is whether he should buy a house or continue renting. Not whether he should rent out a house he owns.

Reading is fundamental.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=Schneed10;886392]Dingus. The choice is whether he should buy a house or continue renting. Not whether he should rent out a house he owns.

Reading is fundamental.[/quote]


I think he got confused becasue the number of side bars going on. Which I caused most of them, sorry.

As far as answering the OP's question S10 has some great advice and a couple of others. Though I am very comfortable with my finances I took a lot of risk holding on to properties and what not early on when I was first starting out. I would not recommend it to everyone.

With that said I can't emphasized enough you have to decide what a comfortable risk level is for you when planing your finances. I build cost models everyday for my customer and everyone of my models has different levels of risk and confidence in them. All the models are then presented to the decision maker and they decide what level of risk they are comfortable with. You can easily do the same with your personal finances.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;886177]In your mind I have done it now counting the condo I bought in college for over 15 years, made great money on that place, over the entire time. I have two other small investment like that. I have had years where I have lost some money on them due to repairs or low occupancy but in the whole scope of the investment I have made positive dollars.

It is just a risk you personally are not willing to take that doesn't make it a bad idea or bad investment. There are many variables that come into play.

I much rather have those dollars wrapped in them then the current stock market.

I would not recommend it to everyone but I have the cash flow right now to make it a low risk investment.[/quote]

It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in? I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=mredskins;886393]I think he got confused becasue the number of side bars going on. Which I caused most of them, sorry.

As far as answering the OP's question S10 has some great advice and a couple of others. [B]Though I am very comfortable with my finances I took a lot of risk holding on to properties and what not early on when I was first starting out. I would not recommend it to everyone.
[/B]
With that said I can't emphasized enough you have to decide what a comfortable risk level is for you when planing your finances. I build cost models everyday for my customer and everyone of my models has different levels of risk and confidence in them. All the models are then presented to the decision maker and they decide what level of risk they are comfortable with. You can easily do the same with your personal finances.[/quote]

I feel more comfortable knowing that you admit what you're doing is not going to work for everyone. Sorry if my tone seems harsh, I am truly happy that it's working out for you, but it is a huge chance you're taking.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;886404]It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in? I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.[/quote]


There is risk in everything. Even yours and S10 plan. Should I never have a child because it could have down syndrome or something else horrible? Life is risk, some people choice to hide from it others choice to accept it but regardless it is still there.

And you are right I am very lucky person and I remind myself ever day of it. I have a healthy wife, my own health and two very healthy children. As far as losing my butt I have safety measures in place but that is not to say the perfect storm would not wipe me out or yourself. Again, I feel very comfortable with my financial situation; there are other factors that I am not going to bring in like my savings and cash flow that help strengthen my safety measures.

You seem to be bitter by my choices and for that I am sorry. Is that you are afraid of risk? Without great risk there are no great rewards.

As far as Waldskins he too can make his own choices; either risky ones or less risky ones.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;886404][B]It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in?[/B] I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.[/quote]


I actually lost my job after 9/11 and my rental properties kept me afloat for six months until my company hired me back. As far as losing money yes that will happen with any rental property from time to time you just have to have the savings/cash flow to ride that wave out. Anyone that has been in "business" has lost money it is the nature of the game.

You seem to believe I have no other forms of income other then my 9 to 5 and I do not have a savings account both are untrue.

Re: A Wedding, a wife, a house oh my!!!
 

Skinsguy is right, that's a lot of risk, mredskins. Sounds like it has worked out well so far.

When you talk about risk in life - babies with down syndrome or likelihood of getting in a car wreck or likelihood of getting laid off - those are probabilities that are not easily quantifiable. However the risk that you'll lose a stream of rental income is very easily quantifiable.

Sounds like you're in good shape, but I'll say it anyway. You should make sure you always maintain an emergency fund that would cover 6 months of your own living expenses + 6 months of the cost of maintaining your rental properties + 6 months worth of whatever debt service payments you have on those rental properties.

If you lost your job and at the same time lost a tenant and still had to make mortgage payments on your rental properties, you'd be in real bad shape.

Sounds like you have some contingency plans. If I were you, I could sleep real well at night in your situation as long as I had 180 days cash on hand.

You were very very exposed to risk early on in this venture. Sounds like it worked out and paid off. But now you have taken steps, and maybe can take more steps, to minimize that exposure going forward.

Re: A Wedding, a wife, a house oh my!!!
 

[quote=skinsguy;886404]I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.[/quote]

That's true, your plan pretty much eliminates all risk. But it also means nobody would buy a home until they were like 40 years old.

Unless you come from old money, it takes time to build up enough cash to cover a 6-month emergency fund plus enough to put down a 20% down payment. While you're taking years to save all that money, you're missing out on the appreciation of home prices. Granted home price appreciation has been nonexistent for five years, but going forward it will come back around.

The practical analysis goes like so: if you build an emergency fund and buy a home with 5% down, you can probably accomplish that by age 28 or so. If you build an emergency fund and buy a home with 20% down, most can't accomplish that until 35. That's a seven year difference.

A $200,000 home will appreciate in value by [B]$46,000[/B] over 7 years, assuming 3% appreciation in home prices (about the historical rate).

If you buy that home with only 5% down instead of 20% down, you're paying:

PMI - $16,800 ($200 per month times 12 months times 7 years)
Interest on the 15% you didn't put down - $10,500 ($30K times 5% interest rate times 7 years)
Maintenance Expense for those 7 additional years: I dunno, call it $2000 per year to be generous - $14,000
[B]Total - $41,300[/B]

That's less than the appreciation you missed out on. And then you get money back on your taxes on the PMI and interest you paid.

You're better off paying 5% down and not waiting to build up the 20%. At least most people are.

I agree there's some risk there, but the risk/reward pays off as long as you have an emergency fund and keep your monthly mortgage payment to less than ~33% of your net income.